Steelworkers to Appeal Shutdown Benefits
Ruling

October 6, 2004 (PLANSPONSOR.com) - The United
Steelworkers of America (USWA) will challenge a federal
appeals court ruling from last week that denied shutdown
benefits to thousands of former employees of Republic
Technologies International (RTI).

>The ruling, made by the US 6th Circuit Court of
Appeals on Friday, makes it clear that the federal
government does not have to pay employees of failed
manufacturers ‘shutdown pensions’ that union officials
claim were promised in labor contracts (See
Appellate Court Shuts Down Shutdown
Benefits Claim
). In this case, the court ruled that the government,
through the auspices of the Pension Benefit Guaranty
Corporation (PBGC), will not have to pay $1,000 to $2,000
per month to about 2,500 employees of RTI, the steel
manufacturer that closed in 2002.

>The Steelworkers claim that the PBGC, the agency
that insures defined benefit plans, preemptively terminated
four RTI pension plans. The PBGC claims that it was not
responsible for the payment of ‘shutdown pensions’ because
RTI never paid premiums to ensure that these benefits would
be paid. The PBGC estimates that the ‘shutdown payments’
would cost the pension insurer $96 billion, and would
ultimately fall on the backs of taxpayers (See
Steelworkers Plan “Shutdown Benefits”
Showdown
).

“The PBGC was created by Congress for this exact
circumstance and has collected insurance premiums in
anticipation of catastrophic events like the RTI
bankruptcy,” said USWA District 1 Director David R. McCall
in a press release. “It’s outrageous for this government
agency to abdicate its fiduciary responsibility to the
workers who had long looked to it for protection.” McCall
asserted that at the time of the shutdown, the PBGC was
paying other companies ‘shutdown pensions’, and that the
sole reason for not doing so here was partisan politics,
due to a new Bush appointee to the head of the pension
insurer.

>Originally, a lower court ruled in favor of the
Steelworkers (See
Republic Lines Up with Steelworkers,
Opposes PBGC Action
). However, the three-judge appeals panel overruled the
lower court, saying that is should have deferred to the
PBGC argument that the ‘shutdown benefits’ would impose an
unreasonable burden.